“With the Make in India push becoming a key driver of investments in the defence sector, there will be a huge opportunity for smaller companies that can design and build sub-systems and meet offset requirements as bigger players focus on large contracts. Aadyah is well-positioned in that niche with an experienced and senior team and our investors wanted to be part of this growth story,” said Denny Kurien, President of the Bangalore and Delhi-NCR chapters of Keiretsu Forum.

“With this investment, and a few others in the pipeline, we also hope to show that angel investment interest has grown beyond the usual sectors of IT and e-commerce,” Kurien added.

Founded in April 2016, Aadyah focuses on building electro-mechanical actuators, control actuation systems and electro optics systems for missiles and launch vehicles. It is targeting business from defence establishments such as Defence Research and Development Organization, Bharat Dynamics Ltd and Indian Space Research Organisation, besides becoming a design and production partner for private manufacturers entering India’s largely untapped defence and space sectors.

Including an earlier round, the company has so far raised around $1.3 million (Rs 8.6 crore), and is expected to close a $1.83 million (Rs 12 crore) fund-raise in November from a group of high-net-worth individuals, Aadyah’s chairman and Managing Director Shaju Stephen and CEO V Sunderarajan told. In October 2016, the company had received a funding commitment of $2 million, but it got only a fraction of that.

Stephen was previously managing director and CEO of the India subsidiary of Spanish multinational company Sener Inginieriay Sistemas SA and Suderarajan was its director. Pradeep Kumar, the former group director of Vikram Sarabhai Space Centre, is Aadyah’s chief technology officer. Besides Stephen, Sunderarajan and Kumar, the other co-founders are former Sener India executives Sabu Joseph, Amarnath Reddy and Varun Kurup.

The company is close to commissioning a 25,000 square-foot space-grade test facility in Bangalore, which will go into production early next year with a 55-member workforce mostly comprising engineers, the founders said. “We have completed the prototype of an actuator for unmanned aerial vehicles which will be tested by defence labs. The testing should be completed by October,” said Sunderarajan. The company has already started bidding for defence contracts. “We have bid for Rs 6 crore of contracts and will be soon bidding for another Rs 10 crore worth of contracts,” he added.

Aadyah has also tied up with UK’s Cranfield University, the only university globally to offer a master’s in guided weapons, for its staff to pursue research courses. It will conduct joint research with Cranfield University for creation of intellectual properties, which will be funded by global defence original equipment manufacturers, the founders said.

Indian venture capital firms are not yet ready for investing in defence-related startups, and the company is not looking for an institutional round at the moment, Stephen said. Should the company achieve its growth targets, Aadyah will look for a much larger VC round by 2019, he added. It is hopeful of foreign institutions coming on board as the government currently allows 49% foreign direct investment in the sector.

Aadyah has also been selected under Karnataka Government’s Elevate 100 grant programme.